Business Information for Entrepreneurs by an Entrepreneur

One of the first rules of business accounting is to keep all your personal bank and credit cards separate from the ones for your company. Mixing the two can lead to confusion about business revenue vs. personal wages, as well as errors in separating personal from business expenses. However, can your business credit cards impact your personal credit?

Mixing Business with Personal Credit Reports

Small business owners are finding that their business credit card activity is being reported on their personal credit reports. Particularly, credit card behemoth, Capital One, is the major culprit.

Capital One has confirmed that their practice is indeed to report all business card activity on personal credit accounts, although this is not the industry standard. Other credit card issuers such as JP Morgan Chase and American Express confirm that they do not report business card activity unless the account is in default.

The other question many small business owners have is whether this practice is legal. Yes, it is. When you provide your personal credit card number on a business card application, you give the issuer permission to check your credit and report business credit to your personal history.

How Your Corporate Finances Impact Your Personal Credit

How does business credit activity affect your personal credit? Even if you manage your business cards well by paying on time and keeping below the credit limit, your personal credit can look overextended. If you wanted to apply for a loan, but a lender found a high level of corporate debt without the personal income to cover it, you could be denied a loan. In addition, your personal credit score could drop with the additional activity.

Therefore, as a small business owner, you must remember that your company's financial activity could show up on your credit. If you wish to avoid this, then step one is to stay away from credit cards issued by Capital One. Step two is to manage your business cards with care to avoid any late payments being published to your credit report.

Small business owners, do you want the good news or the bad news first? The good news: signs point to the conclusion that the economy is once again strengthening and consumer confidence is growing. The bad news is that small businesses will continue experiencing an increase in operating costs into 2010.

Growing Expenses for 2010

According to the Business Inflation Guide (BIG) published by More Th>n Business, a small business resource located in the UK, commodity prices rose in the 3rd quarter of 2009 and are expected to continue rising into July of 2010. The BIG is a helpful guide that measures 20 of the most frequent expense items for small businesses.

Costs that are on the rise include fuel and vehicle costs, raw materials, capital equipment, telecommunication, and electricity. However, some costs are seeing declines, such as labor, insurance, rent, as well as large decreases in natural gas costs.

What does the BIG report mean for small businesses? For the most part, it means that small business owners need to carefully manage their cash flow and keep a close eye on operating expenses.

The Industries Most Impacted by Rising Costs

The statistics show that manufacturing businesses are likely to experience higher expenses than service businesses. Particularly, small manufacturers or industrial firms should watch for higher prices from material suppliers. Perhaps these business owners might look for optional suppliers or negotiate with current suppliers.

Operating costs should be managed carefully as well. Business owners need to limit costs for professional services, such as legal, accounting, and financial services. Utilities will likely see hikes on the balance sheet as well. Business owners and managers could set policies to reduce electricity and telecommunication usage. All types of small businesses that use vehicles will need to keep a close tab on fuel and leasing costs.

Although the BIG report is researched and published in Great Britain, there are still lessons to be learned for American small businesses. The economy is once again on a path to steady growth. Although expenses for certain operating and material costs may be rising, it's good news to be spending money to make money in 2010.

Deceptive marketing is unethical and a scam, and it has no place on the internet, says the Federal Trade Commission (FTC). If you operate a website with a shopping cart checkout system, be careful how you sign up paid subscribers or offer other free trials.

The Dangers of "Free Trials"

Recent national news stories have been broadcast highlighting victims who felt they were conned into signing up for subscription services just by ordering a "free trial" of a product. Little did the victims know that by ordering the free trial, they were also signing up for other paid subscription services that they had no intention of purchasing.

How did that happen? The website operators firmly believe they were clear about their terms for subscription services. However, customers do not agree, and neither does the FTC.

The FTC Crackdown on Online Free Trials

In August, the FTC began shutting down websites that they felt were deceptive. One example was a site offering free help to obtain federal grant money. However, customers simultaneously signed up for unrelated services like insurance or identity theft protection if they didn't "opt out" within a few days.

The FTC states that automatically enrolling a customer in a paid service through a checkout without clearly stating what the customer should expect is unacceptable. That means businesses cannot auto-check boxes for opting in, nor can the box be hidden "below the fold" of the screen monitor.

Partnering with Visa and the Better Business Bureau, the FTC has set up an alert and published tips on how to protect consumers from deceptive marketing scams. Visa has posted that they are more than willing to reverse fraudulent charges made by deceptive marketing practices, and the FTC is cracking down on businesses who are running these types of scams.

Should You Change Your Website?

So what can you do? If you offer free trials with an additional enrollment requirement, be sure you highlight to the customer what their responsibilities are. Clearly state whether you intend to make recurring charges if you collect their credit card number during the checkout process. In addition, give customers more than a few days (or hours) in which they can "opt out" of an enrolled service. In the end, you will have more happy customers and avoid getting shut down by the FTC.